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Standard-Setting, Innovation Specialists, and Competition Policy

Massachusetts Institute of Technology (MIT) - Sloan School of Management

April 30, 2009

Abstract:

Using a simple model of patent licensing followed by product-market competition, this paper investigates several competition policy questions related to standard-setting organizations (SSOs). It concludes that competition policy should not favor patent-holders who practice their patents against innovation specialists who do not, that SSOs should not be required to conduct auctions among patent-holders before standards are set in order to determine post-standard royalty rates (though less formal ex ante competition should be encouraged), and that antitrust policy should not allow or encourage collective negotiation of patent royalty rates. Some recent policy developments in this area are discussed.